Prime Minister Hun Sen on Tuesday said the government had allocated between $800 million to $2 billion to address the economic impacts of the novel coronavirus outbreak, which had affected upwards of 80 countries and infected more than 100,000 people.
Hun Sen said the lower end of the allocation would help deal with economic slowdown over the next six months, with the $2 billion expected to be needed if the outbreak lasted more than one year.
“The government allocates funds based on two scenarios of COVID-19,” he said. “There will be $800 million for a period of six months and $2 billion if the outbreak lasts a year and longer.”
Last week, the Cambodian government announced an allocation of $30 million to finance Cambodia’s screening and monitoring efforts, as well as cutting capital expenditures by 50 percent at all ministries and state institutions.
Meas Sok Sensan, spokesperson of the Ministry of Economy and Finance, said the government had enough reserves from good economic growth over the years, adding that it would be used to pay workers affected by factory suspensions and for tax breaks announced for tourism businesses.
“The government has collected higher-than-expected tax revenues over the last five years,” he said. “So, the last five years have seen us save some money that we could use to cope with crises.”
The prime minister’s capital infusion seemed to match forecasts made by the Asian Development Bank on Tuesday for all countries it provides funding. The forecast showed the best-case scenario, two months of outbreak, would result in $283 million in GDP loss, whereas six more months of the viral outbreak would see a $711 million loss in GDP.
A moderate-case loss of $391 million would result in a 1.59 percent drop in GDP growth, whereas a hypothetical worst-case scenario, where the outbreak would last more than 6 months, would see close to $1 billion in GDP loss.
The development bank factored in drops in Chinese and other tourist arrivals, drop in income, especially from Chinese tourists, vis-à-vis similar losses during the SARS outbreak, and drop in tourism from various travel bans and restrictions across the world.
San Chey, executive director of the Cambodian Social Accountability Alliance, said that while it was good the government had allocated emergency funds for the COVID-19 outbreak, the administration needed an ironclad plan to prevent wastage and scandals linked to the allocated money.
“To prevent any bad scandals with the budget, we have to think of the spending and prepare a specific plan to prevent any irregularities that may occur,” he said.